Question: *PLEASE NO EXCEL! ONLY FORMULAS!* Alex borrows $1000 for 10 years at an annual effective interest rate of 10%. He can repay this loan using

*PLEASE NO EXCEL! ONLY FORMULAS!*

Alex borrows $1000 for 10 years at an annual effective interest rate of 10%. He can repay this loan using the amortization method with payments of $P at the end of each year. Instead, Alex repays the $1000 using a sinking fund that pays an annual effective rate of 14%. The deposits to the sinking fund are equal to $P minus the interest on the loan and are made at the end of each year for 10 years.

(a) Determine the value of P.

(b) Determine the balance in the sinking fund immediately after repayment of the loan

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